Russia and China Join Forces in Attempt to Dominate the Skies

Considering the close attention that Vladimir Putin and Xi Jinping are paying to their countries’ joint jumbo jet project, it is clearly political. Russia and China have grand ambitions: they want their own civil aviation industries to be on a par with those of industry leaders like the United States and France. Moscow and Beijing are willing to team up for the sake of these ambitions, since neither can catch up to Boeing or Airbus on its own.

If any visitors to the MAKS 2017 air show held outside Moscow this summer were hoping to find out more about the joint Russian-Chinese project to build a wide-body long-haul jet, they would have been disappointed. Only sporadic information about the project was heard at MAKS, and the impressively large model of the airplane that was built by the Commercial Aircraft Corporation of China (COMAC) was not on show, as COMAC was not taking part, while the Russian side—United Aircraft Corporation (UAC)—has not yet built a model of its own.

That is not to say, however, that the project lacks official interest. When the model was first presented at Airshow China in November 2016, Russia’s Minister of Trade and Industry Denis Manturov and UAC president Yury Slyusar made a one-day visit to Zhuhai especially for the event. Together with their Chinese colleagues, they ceremoniously unveiled the model in front of television cameras.

And when COMAC brought the model to the Paris Air Show this year for its international debut, it was displayed against a scrolling backdrop of images of meetings between Chinese leader Xi Jinping and his Russian counterpart Vladimir Putin.

After all, Russia and China held talks about the joint aviation project for almost a decade. In 2009, then UAC president Alexei Fedorov forecast that the third major player in the global aviation industry would appear “as a result of joint projects by Russia and China.”

Little happened for several years, though at meetings with Chinese officials Putin repeatedly spoke about the need to join forces and create a wide-body jet that could compete successfully on the global market.

After Xi came to power in 2012, the subject remained on the agenda of meetings between the Russian and Chinese leaders, but the project did not gain momentum.

Noticeable progress was finally made in 2014 due to both internal and external factors. In both countries, major state aviation industry conglomerates had coalesced, the EU and the United States introduced sanctions against Russia over its actions in Ukraine, and Xi expressed regret during a visit to a COMAC plant that the lack of its own airplanes made China dependent on foreign producers.

In May 2014, when Putin was in China, UAC and COMAC signed a memorandum on cooperation, and in June 2016, during another visit by the Russian president to Beijing, an intergovernmental agreement was concluded. It was then that some clarity was achieved on the approach to a joint venture: there should be no leader, and everything should be divided equally.

Considering the close attention that Putin and Xi are paying to the project, it is clearly political. Russia and China have grand ambitions: they want their own civil aviation industries to be on a par with those of industry leaders like the United States and France. Moscow and Beijing are willing to team up for the sake of these ambitions, since neither can catch up to Boeing or Airbus on its own.

In early 2017, UAC and COMAC set up the China-Russia Commercial Aircraft International Corporation, which goes by the jovial abbreviation CRAIC. The project partners, however, are quite serious: they have opened an office, appointed managers, and divided up the work. They are committed to maintaining a strict 50/50 split on everything. The office is located in Shanghai, close to the site of the final assembly, the COMAC plant, but the engineering center will be in Moscow. The general director of the joint venture is a COMAC manager, but the chairman of the board of directors is from UAC. The board comprises eight directors: four from each side.

“With regard to the division of labor on the airplane frame itself, we agreed that the wing, the center wing section, and the tail will be produced in Russia, while Shanghai will be responsible for the body and the final assembly,” Slyusar said at the Paris Air Show. He explained that the location for final assembly was chosen due to its proximity to target markets, and he dismissed as unfounded fears that the airplane would ultimately become Chinese.

“We will have access to a market where ten times as many airplanes are sold as in Russia, and we will have guaranteed success for many years to come, even on the Chinese market alone. Such opportunities are rare for any producer, and one should value them highly,” said Slyusar.

Production will begin with a basic version that will have 280 seats and a range of 12,000 kilometers. According to the feasibility study prepared by UAC, the preliminary design review for the airplane is expected to take place in late 2018, with the first contract to be signed in 2019, the first flight to be made in 2023, and deliveries to begin in 2026. According to preliminary estimates, the project will cost $13–20 billion.

The planned airplane is described in Russian (and reportedly Chinese) pro-government media as a “killer” of Airbus and Boeing, though there is some question about which specific models it would “consign to oblivion.” Slyusar seems to believe that the A350 and B787 will be at risk, while COMAC general manager Guo Bozhi has referred to the A330 and B777.

All four models are long-haul wide-body aircraft. The principal difference is that the A350 and B787 are new to the global aviation market and are made with 50 percent composite materials (which changes the production cycle), while the A330 and B777 are so-called previous-generation aircraft that primarily use aluminum. Of course, it is a little early to talk about competition: the Russian-Chinese airplane won’t be on the market for a decade (as per the feasibility study), and Airbus and Boeing aren’t likely to sit idly by that entire time.

The project faces several obvious risks. Politically, the project is a long-term one: what will happen when there is a change in leadership in either country? Financially, the only source of funding is state budgets, but Russia and China are both in a difficult position now and face dim prospects ahead.

From the viewpoint of corporate culture, Germany and France have a difficult enough time coexisting in Airbus, and those countries have a lot more in common. Finally, there are challenges relating to mentality: language barriers, differing behavior models, and other seemingly minor details that could complicate if not terminate the process.

In addition to these evident risks, the project could encounter many hidden obstacles long before it reaches the market. It remains to be seen which of these it will be able to navigate, and which it won’t.